Re: Advisory Opinion; Exemption of Department of Insurance from Articles 3 and 3C, Chapter 143 of the North Carolina General Statutes

Dear Mr. Kolbe:

In a memorandum, dated August 2, 2001, and addressed to Ted Williams, Special Deputy Attorney General, you requested the assistance of this Office in resolving an issue “concerning the Department of Insurance’s engagement of individuals under personal professional services contracts.” Your specific question is whether certain language included within N.C.G.S. § 5865-131(e) allows the Commissioner of Insurance to avoid the “requirements typically imposed by the Department of Administration’s Office of Purchase and Contract.”

Based upon the following analysis, it is our conclusion that the answer to your question is “yes.”

N.C.G.S. § 58-65-131(e) provides as follows:

Filing Conversion Plan; Costs of Review.--A corporation shall file a plan for conversion with the Commissioner and submit a copy to the Attorney General at least 120 days before the proposed date of conversion. The corporation or the new corporation shall reimburse the Department of Insurance and the office of the Attorney General for the actual costs of reviewing, analyzing, and processing the plan. The Commissioner and the Attorney General may contract with experts, consultants, or other professional advisors to assist in reviewing the plan. These contracts are personal professional service contracts exempt from Articles 3 and 3C of Chapter 143 of the General Statutes. Contract costs for these personal professional services shall not exceed an amount that is reasonable and appropriate for the review of the plan.

(Emphasis added.)

Peter A. Kolbe August 24, 2001 Page 2

Purchases and contracts made by State agencies in general are governed by Article 3 of Chapter 143 of the North Carolina General Statutes. Contracts entered into by a State agency to obtain consultant services are specifically addressed in Article 3C of that Chapter. Subsection

(b) of N.C.G.S. § 143-64.20 mandates, in pertinent part, that “[n]o State agency shall contract to obtain services of a consultant or advisory nature unless the proposed contract has been justified to and approved in writing by the Governor of North Carolina . . ..” The Governor must make certain findings before granting written approval of a contract to obtain consultant services, including a finding “[t]hat all rules and regulations of the Department of Administration have been or will be complied with.” N.C.G.S. § 143-64.21(5).

There are exceptions to these requirements. One such exemption, in clear and unambiguous language, is found in N.C.G.S. § 58-65-131(e): “These contracts [with experts, consultants, or other professional advisors] are personal professional service contracts exempt from Articles 3 and 3C of Chapter 143 of the General Statutes.”

It should be noted that a potential conflict exists between subsection (e) of N.C.G.S. § 5865-131 and another provision of Chapter 58. N.C.G.S. § 58-2-25(a) provides, in pertinent part, as follows:

If the Commissioner considers it to be necessary for the proper execution of the

work of the Department to contract with persons, except to fill authorized

employee positions, all of those contracts, except those provided for in Articles 36

and 37 of this Chapter, shall be made pursuant to the provisions of Article 3C of

Chapter 143 of the General Statutes.

(Emphasis added.)

Although subsection (a) of N.C.G.S. § 58-2-25 omits reference to Article 65, that omission is not fatal. The section of Article 65 that is the subject of this advisory opinion was not enacted until 1998. There has been no revision to subsection (a) of N.C.G.S. § 58-2-25 since 1991.

Assuming arguendo that a conflict exists between the two statutes, that conflict can be resolved by a well-established rule of statutory construction:

Where there is one statute dealing with a subject in general and comprehensive

terms, and another dealing with a part of the same subject in a more minute and

definite way, the two should be read together and harmonized, if possible, with a Peter A. Kolbe August 24, 2001 Page 3

view to giving effect to a consistent legislative policy; but, to the extent of any

necessary repugnancy between them, the special statute, or the one dealing with

the common subject matter in a minute way, will prevail over the general

statute . . . unless it appears that the legislature intended to make the general act

controlling; and this is true a fortiori when the special act is later in point of

If N.C.G.S. § 58-2-25(a) is considered to be a general statute regarding the Department’s contracts to obtain consultant services, and if N.C.G.S. § 58-65-131(e) is considered as a specific statute regarding such contracts, then the latter statute should prevail in this analysis. In accordance with the language of N.C.G.S. § 58-65-131(e), the personal professional service contracts described therein are exempt from the requirements of Articles 3 and 3C of Chapter 143 of the General Statutes.

In summary, we conclude that the Commissioner of Insurance has the statutory authority, pursuant to N.C.G.S. § 58-65-131(e), to contract with experts, consultants, or other professional advisors to review conversion plans without adhering to the requirements set forth in Articles 3 and 3C of Chapter 143 of the General Statutes. The only statutory requirement that must be met by the Commissioner is that the costs for the personal professional service contracts “shall not exceed an amount that is reasonable and appropriate for the review of the plan.” N.C.G.S. § 5865-131(e).

We hope that this advisory opinion will be useful to you. Please let us know if you have additional questions concerning this matter.